We’ve reached the end of November and while the Dollar’s slide over the past two days has opened the door for Rand gains the greenback is still on track for a 2% monthly gain, and this after a 3% gain in October.? Hopefully this trend reverses soon so that the Rand can enjoy some Christmas cheer!!!
These are the mid rates at 5:45 today:
Brent Crude = $72.78 per barrel
- With the US closed for Thanksgiving Day yesterday big moves in the currency market were highly unlikely but fortunately what little price action there was saw the Rand strengthen from R18.20 to R18.09.? With just one session left in the month we look set to close November well off our opening level of R17.52.
- There’s very little to report given the US public holiday yesterday, and with most Americans taking today off to make a long weekend of it plus there are no scheduled US data releases it seems safe to assume that movements in the currency market will remain muted.? We have however seen a small pullback in the Dollar Index with analysts suggesting that traders could have engaged in a bit of profit taking before the end of the month, especially when considering the thin liquidity due to the US holiday.?
- Another potential reason for the Dollar’s slide could be positive news for the Euro as well as the Japanese Yen, and with these currencies enjoying a small boost that is putting a little pressure on the Dollar Index.? European economic conditions remain extremely fragile but influential ECB member Isabel Schnabel said that Eurozone inflation is headed towards the central bank’s 2% target and that they don’t need to aggressively cut interest rates to achieve their target. ?The market has been pricing in cuts at every ECB meeting through to June 2025 which would take their interest rate down to 1.75%, but Schnabel’s comments suggest fewer cuts and a higher terminal rate which was a tailwind for the Euro.?
- The following is from Reuters: The European Central Bank should cut interest rates only gradually and not lower them to a level that stimulates growth since that would not resolve the economy's deep structural faults, ECB board member Isabel Schnabel told Bloomberg. "Given the inflation outlook, I think we can gradually move toward neutral if the incoming data continues to confirm our baseline," Schnabel said, referring to an interest rate level that neither stimulates nor slows growth. "I would warn against moving too far, that is into accommodative territory. I don’t think that would be appropriate from today’s perspective."
- We’re also seeing strength in the Yen after Japan’s consumer inflation print came in higher than expected which could tempt the Bank of Japan to lift interest rates in December.? The Yen jumped by 1% on this data report, and with the Yen joining the Euro in terms of strength based on their local headlines this has helped push the Dollar Index down to 105.92 and in so doing helping the Rand hit R18.09.? As mentioned, these are small moves due to the US holiday, but let’s see if further progress can be made with US financial markets open for a half day today.? ?
- Local market data today sees our private sector credit extensions at 8:00 followed by our balance of trade and budget balance at 2pm.?
- Possible USD mid rate trading ranges in the Rand today are R17.95 and R18.25.
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